Moving DDA Ag Talks Ahead

Mombasa – The three-day informal trade ministerial meeting held here helped World Trade Organization negotiators cross the first hurdle in grappling with the contentious issue of converting special and complex tariffs into ad valorem equivalents – needed to open the way for construction of a formula for effecting deep cuts in tariffs for farm products (WTD, 3/4/05).

The breakthrough on AVEs came late Thursday when the European Union – under pressure from the United States, Australia, Brazil and India – agreed to submit its tariff data by the end of next week for detailed review by negotiators in Geneva. Brussels had protested that some of its special tariffs – such as those in agriculture based on quantity rather than value – would not easily convert to a single-formula approach. Brussels was told bluntly by other member of the "Non-Group of Five" countries that it would bear the brunt of blame if ministers could not agree on such a technical issue.

The EU will contribute constructively "to matching an agreement on the AVEs issue by end of April," said EU trade commissioner Peter Mandelson.

But acting US Trade Representative Peter Allgeier told reporters on Friday that there is no assurance yet that AVEs would not be converted back to special and complex tariffs. He suggested that discussion would come later in the process.

Despite a lot of discussion, ministers were unable to put services squarely on a fast track – other than call for better and more offers by May. USTR's Allgeier insisted that the services pillar in the DDA is just as important as agriculture and industrial market access. "The standing of services in the negotiations were very, very clearly affirmed," he told reporters. On WTO rules, the outcome was "modest," according to one South Korean official. Ministers agreed only to an outline by June and a full text for the Hong Kong ministerial in the fall.

AVEs

Despite the breakthrough on the conversion of special and complex tariffs into ad valorem equivalents here by some 30 trade ministers, senior trade officials from the Cairns Group of farm exporting countries and the Group-of-20 developing-country coalition predicted new difficulties as agriculture negotiations continue into the spring.

In the April special session on agriculture, there will be a tough battle when the European Union, Switzerland, Japan, Norway and South Korea submit their tariff data using the ad valorem equivalent methodology because the actual level of protection in some 200 to 300 items will be revealed, a Cairns group negotiator told WTD. Should actual levels of protection be seen as unduly high in those products, one can expect those "defensive" countries to question the methodology.

Items such as sugar, beef, dairy products and rice will be the most obvious, he suggested.

For the time being, the breakthrough in AVEs will move the agriculture negotiations along, culminating in a special negotiating session in April. All members – including the EU – have agreed to submit their tariff data by the end of next week. At the April special session, members will hammer out a tentative framework. Subsequently, they will present tariff data for all their farm products in ad valorem rates for the April session. Aside from the AVE issue, Brazil, Argentina and India raised their expectations for an ambitious framework to tackle trade-distorting subsidies – particularly "blue box" support programs and even the minimally trade-distorting "green box."

EU commissioner Mandelson and Swiss trade minister Joseph Deiss said an agreement on additional protection for farm products under Geographical Indications is needed in the agriculture negotiations if the farm talks are to result in an ambitious outcome.

Australian trade minister Mark Vaile told WTD that there is no place for GIs in the farm negotiations. It must be addressed in the Trade-related Intellectual Property Rights Council, he said.

Kenya Trade Minister Mukhisa Kituyi told WTD that the breakthrough means that Doha Development Agenda negotiators will come to a consensus on cutting tariffs based on a non-linear "Swiss" formula approach. WTO members will use the AVE methodology to prepare their actual farm tariff schedules based on common rates at this April's special negotiating session on agriculture.

More than 30 trade ministers from the major players agreed the special mini-ministerial created new momentum in the DDA.

But privately some participants told WTD that difficult gaps remain before all areas of the negotiations can close – particularly in agriculture, market access for industrials, services and development issues.

The Mombasa meeting took a novel approach in structuring mini-ministerials. For the first time, there was a precursor ministers-only session, which – according to Mr. Kituyi – resolved few major issues.

An 2006 End

Acting USTR Allgeier said the meeting gave added impetus to the negotiations in Geneva – making the prospect of concluding the round by the end of 2006 more credible. The final success of DDA talks, however, will require a "big bang," he stated at a concluding press conference. Singapore trade and industry minister Lim Hng Kiang – the chief discussant at the session on agriculture here – told ministers that Doha negotiations would have to move quickly in agriculture. He said progress in other areas of the agenda will depend on agriculture.

Brazilian foreign minister Celso Amorim told WTD that progress in agriculture and development issues will drive discussions in other areas – including industrial tariffs and services. On non-agriculture market access and services, the minister insisted that agriculture and developmental issues will drive the progress in those other two pillars of the Doha Development Agenda negotiations. He sharply criticized Hong Kong's demand for a stand-still in the services talks now to ensure that countries do not alter their current initial offers. Before moving ahead in services, Mr. Amorim said Brazil first has to know the likely outcome in agriculture. On nonagricultural market access, ministers agreed on a non-linear "Swiss" formula intended to drop high tariffs faster than others. But differences continue over the elements of the "Swiss" formula – and how it will address flexibility and less-than-full reciprocity for developing countries.

Ministers failed to agree on the necessity of reaching a "first approximation" on an industrial tariffs formula in time for the next min-ministerial set for Paris in May. But Kenyan host Kituyi suggested that all WTO members would "expeditiously" submit written proposals on elements that will constitute the formula by June.

EU trade commissioner Mandelson cited a growing consensus among participants on the principles that should underpin the DDA negotiations in industrial tariffs.